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Sarbanes–Oxley Section 406 Code of Ethics for Senior Financial Officers and Firm Behavior

Author

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  • Saurabh Ahluwalia

    (University of New Mexico)

  • O. C. Ferrell

    (Belmont University)

  • Linda Ferrell

    (Belmont University)

  • Terri L. Rittenburg

    (University of Wyoming)

Abstract

Sarbanes–Oxley Section 406 requires a code of ethics for top financial and accounting officers in public companies. The objective of this research is to discover the impact of a financial code of ethics on firm behavior. We performed a longitudinal tracking of firm adoption of a financial code of ethics starting in 2005. We checked these companies’ codes again in 2011 to confirm their continued implementation. Financial restatements were used as a dependent variable to measure improved financial reporting after the adoption of the financial codes. The results confirm that the adoption of a financial code of ethics improves the integrity of financial reporting.

Suggested Citation

  • Saurabh Ahluwalia & O. C. Ferrell & Linda Ferrell & Terri L. Rittenburg, 2018. "Sarbanes–Oxley Section 406 Code of Ethics for Senior Financial Officers and Firm Behavior," Journal of Business Ethics, Springer, vol. 151(3), pages 693-705, September.
    • Handle: RePEc:kap:jbuset:v:151:y:2018:i:3:d:10.1007_s10551-016-3267-7
    DOI: 10.1007/s10551-016-3267-7
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    References listed on IDEAS

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